Risk Management Flashcards
What is strategic risk?
Long-term, broad based exposure related to the overall strategy of the organization
What is operational risk? (business risk)
Short-term in nature and includes process his, shared service risk, and credit/default risk.
What is market risk?
Associated with economic events or natural disasters
What are risk management approaches?
Structuring operating leverage to company’s advantage
Providing contingency planning for disaster recovery and business continuity
Hedge
Using insurance for risk mitigation
Evaluation the level of uncertainty when estimating future costs and revenues
More variable costs reduces the risk of not breaking even, while more fixed costs increase the contribution margin on sales allowing us to make a trade-off between risk and return
TRUE
One way to quickly change the dominant portion of risk types is to lease assets rather than purchasing them
